Industrial Hubs Redefine Shipping Efficiencies
Today’s consumers have high expectations. They want—and expect—to receive their desired doodad as fast as possible, and industry is responding. Companies like Amazon, Target and Wal-Mart have raised the distribution bar, providing their customers with products faster than ever. But moving a product from manufacturer to consumer isn’t a cakewalk—numerous intricacies affect the flow of goods across America and the world. From efficient ports to modern warehousing to effective distribution hubs, a product’s passage from manufacturer to consumer is a masterfully planned journey.
PORT OF ENTRY
Approximately $400 billion of goods are shipped to Southern California’s Long Beach and Los Angeles port complex—the largest port complex in the country. The two ports work like a well-oiled machine, receiving and processing goods and then pumping them to distribution hubs throughout the United States. The Port of Los Angeles manages more than $200 billion worth of goods annually, while the Port of Long Beach handles approximately $180 billion worth of goods annually.
“We play an important role in distribution,” says Art Wong, assistant director of communications at the Port of Long Beach. “Especially over the last decade or two, more and more cargo comes through the port, and so much work in the warehouse and distribution industry is directly connected to what we do.”
Most of the goods entering Long Beach and Los Angeles ports are shipped from East Asia, taking about two weeks to travel across the Pacific Ocean before docking in Southern California. “Most of the goods, 60 percent, come from China, but we also get goods from Japan, South Korea, Taiwan,” explains Wong. “Just about everything—clothing, toys, shoes, furniture, car parts—comes here. It’s the whole shopping mall.”
Once goods arrive in the port, technology has made it possible to process and move containers to their next destination within days. “Almost 30 percent of the things that land in Long Beach go directly on a train and leave the region,” says Wong. “The other 70 percent is trucked out of the ports and goes to a warehouse. Of that, maybe 30 percent stays in Southern California, but the rest is reloaded and put onto domestic containers and moves across the country. Ultimately, two-thirds [of goods entering the Long Beach port] end up on a train or truck and go outside of this region.”
Wong says the Southern California warehousing system is essential to the port’s efficiency. Several short-term warehouses are located anywhere from 15 to 60 miles away from the port, which means goods can quickly be transported to a warehouse, easing up congestion at the port. Moreover, efficient, short-term warehousing means importers can decide where to move their goods based on real-time consumer demands, versus deciding where to move their goods months in advance.
“Instead of making that decision weeks or months beforehand, they can make it just a few days before it gets here. An importer can decide, ‘I need more bathing suits or cold weather jackets in this area in the country,’” says Wong. “They’re able to get the product to the right places instead of wasting weeks [in transit]. Coming here is a faster, more direct way to get products to so many places across the country. It’s very sophisticated.”
Efficiencies at the ports continue to improve, thanks to technological advances, which means consumers are getting their goods faster than ever. And Wong anticipates the distribution process to get even better.
“We have many initiatives, including trying to expand the rail network so we can handle even more cargo by train. We have systems to create trucker assistance, so we get truckers in and out more efficiently. You’re talking about a major effort to make the whole network even more efficient,” he says. “We want to make the supply chain work better from one end to the other end. And we’re trying to get the port and all our partners better connected. We’re at the beginning of some of this, but it’s becoming more efficient.”
The interconnection among ports, rail and truck transit solutions, and industry, is essential to the flow of goods throughout the country. And, as Wong describes, the journey from port to market is happening faster than ever. This expediency isn’t just pleasing consumers, it’s also bolstering industry.
Either by truck or rail, goods make their way across the Intermountain West, landing in distribution hubs like Phoenix, Ariz., Reno and Las Vegas, Nev., and Salt Lake City, Utah. Several industrial spaces are located in close proximity to those hubs, creating a nearly seamless transition from port to distribution hub to consumer. In today’s world, where consumers expect to receive their goods faster than ever, a company’s site selection is essential. Finding a location that creates an efficient and cost effective distribution process can make or break a company with distribution needs, says Jarrod Hunt, senior vice president at CBC Advisors. “Companies look at so many aspects when site selecting,” says
In today’s world, where consumers expect to receive their goods faster than ever, a company’s site selection is essential. Finding a location that creates an efficient and cost effective distribution process can make or break a company with distribution needs, says Jarrod Hunt, senior vice president at CBC Advisors.
“Companies look at so many aspects when site selecting,” says Hunt. “They’ll take into consideration labor costs and labor availability, costs of real estate and availability of real estate. They will also take into consideration where their customers are and what impact locating in a certain city will do to their customer’s shipping costs and their delivery costs to the end user. Choosing a site is a complicated process.”
Before selecting a site, companies typically conduct detailed transportation modeling to gauge the costs and time involved to move a product from supplier to its final destination, says Hunt. They will also consider where their vendors and suppliers are located, as well as where freight carriers are located.
He points to a company locating near a UPS shipping hub as an example of expediting the distribution process. “If they are right next to a UPS shipping hub, they can extend out their processing a full day before UPS has to actually come and get their freight. Because UPS is right next door, it gives them more time to process the order,” Hunt says. “That’s something that a lot of companies take into consideration when they’re selecting a site. If their goal is to ship online orders the same day, it gives them extra time to process that.”
Beyond site selection, Hunt says selecting a warehouse with modern features will accelerate the distribution process further. For example, Hunt points to a warehouse’s ceiling that has been expanded from 24 feet to 28 feet. That additional roof height, he says, has greatly improved the process.
“They’re able to take advantage of the higher cubic room in the building and stack their product higher,” says Hunt. “Fork lift equipment has improved dramatically— they’re able to go higher and much quicker. And, there’s a lot more automation that wasn’t available years ago. There’s a lot of technology that companies take advantage of.”
Other technological advances, such as improved lighting, energy efficient heating and cooling, and radio frequency identification devices that track products on the shelves, are greatly enhancing the distribution process.
“People are taking a harder look at the efficiency of their processes under the roof,” says Hunt. “A lot of technology is being adopted by the industry that makes things work better in the building. It’s a fast-changing and exciting industry to be a part of.”